good morning. ready or not, earnings season is here big time. it's monday, january 14th, 2013. we're off a week from today. it's a three-day weekend. i'm already thinking about that. "squawk box" begins right now. good morning, evody. welcome to "squawk box" here on cnbc. we are looking forward to that three-day weekend already. i'm becky quick along with joe kernen and andrew ross sorkin. apple is reportedly cutting its component orders for the iphone 5 because of weaker than

expected demand. the tech giant's orders for screens for the first three months of the year have dropped to roughly half of what it had previously planned to order. apple is said to have notified the suppliers of the order cut last month. take a look at shares of apple. as you know, they've been under pressure for a while. right now, down about 3%. just over 3.5% -- or just under 3.5%. 3.3% to $503.11. oracle released an emergency update to its java software yesterday. however, it failed on protecting pcs from hackers. last week, users were told to disability java apps. andrew. >> also in the headlines this morning, u.p.s. withdrawing its

$7 billion bid for tnt express on expectations that european commission will be preventing that merger. in japan, japan's transport ministry has announced it's launching an investigation into causes about fuel leaks. yesterday, the airline said a 787 undergoing check necessary tokyo following a fuel leak at the boston airport last week during their test and is that's been driving a lot of this. there's a good piece in the "wall street journal" today about the dream liner and 787, what all this means and a look at some of the things that some airlines have been doing earlier to try to keep everybody on schedule both here in the u.s. and abroad. >> we need a pair of pliers. you know how we share desks with other shows and other screens? >> like you're doing -- >> they moved all of the settings on these screens. >> you don't know who it was?

>> no. but i'm going to make it really tight so that nobody can move it again. >> i would like to -- don't we have cameras? is there any way we record -- >> well, i'm pretty sure i can figure out who it is. >> who do you think it is? >> it's probably scott wapner. i think he uses this desk for the halftime money report. >> so does larry. >> larry does, too? yes. >> it changes everything. >> credit suisse is reportedly cutting its 2012 bonus pool by 20% or around $2.5 billion. that would mark the fourth year in a row that the swiss bank has slashed payouts. the bonus pool was seen following another 20%. and goldman sachs is reportedly considering delaying bonuses in the uk until after april 6th. that's when the top income tax rate in the country will drop the 45% from 50. the strategy relates to bonuses that were deferred from 2009,

2010 and 2011. goldman brought forward payments of deferred stock to executives in the united states to 2012 in order to beat tax hikes implemented for top earnses in 2013. we will talk more about bonus season later today with alana einstein. >> it shows you how crazy it is when all of these countries have moving targets for taxes. everybody plays around the corners and tries to evade as much as they can. >> i guess al jazeera gore missed by a day. >> you're saying he should have sold? >> he's trying hard but, anyway, he's worth more than romney now. >> i did hear that. >> how much is he worth? >> like 100 million from selling his left wing green outfits to the -- one of the biggest oil -- i love him. anyway, yeah, i don't want him to blow it all on food and stuff

like that. and swatch is buying the luxury jewelry arm of harry winston for $750 million in cash. swatch is the biggest watchmaker by sales and the latest deal should help it expand into high end necklaces, bracelets and necklaces. they're loading with high-end bracelets and -- do you have new lipstick or something? your hair, it's a soft look today. >> i know. maybe. >> what did they do, seriously? >> she did the hair a little softer. >> did you see kelly -- somebody happened to kelly. she got caught in the rain today. >> oh, i liked her earrings today. i did see her. >> no, but it's her hair. it's humid on the way here. foggy. >> you weren't even driving. >> we were saying, can you believe it? >> you can't drive much faster. >> i heard you're supposed to keep distance, but that was -- i

don't know. i was listening to the weather. keep distance. there was no one in front of me, which makes it even harder to drive when there's no one sort of running interference. and it's the fun, the exits which are the most fun because you just watch thitee and is when the white line ends, you assume you can go over. you know what? reality is reality. and i know where i am. and i know that there's a turn here and i know -- and that's not going to change just because i can't see it. >> no, you but i got nervous. i couldn't see the lights coming in. >> but it is there. >> but i was counting the exits and i don't count as well because i almost turned on a street too early. it was that foggy out. >> reality doesn't change it. like the mist had changed. >> that was stephen king. i did see those. >> let's talk about some washington news. it does not look like there will be a $1 trillion platinum coin.

the treasury department says it will not produce platinum coins as a way of generating the $1 is trillion revenue. >> so silly. >> the way they were looking at trying to avoid a battle in congress over raising the debt ceiling. the fed coming to the same conclusion that the idea behind the platinum coin was that the treasury would mint a core or coins for precious metal and the value would be based at $1 trillion. the united states is expected to reach its debt limit of $16.4 million last month. >> how many -- >> and it would have created sh -- there's the idea of used the 14th amendment to say that you have to pay your debts. but it would have created huge problems for the democrats as a way of just saying, you can make up any kind of mope. >> no. but a lot of people said if one side is going to play hard ball,ing. >> they would have been tide up in reports forever.

>> there is a provision for it. easily done. i wanted one. that's a lottery you want to win, that coin. >> a printing press, right? >> a trillion dollar coin. >> i could never spend that much money. it would be impossible. >> ever see brewster's manage? >> i know of it. >> i don't remember. i remember -- >> why you wouldn't keep it. >> richard pryor was in it. >> very difficult. >> the debt ceiling is still around. >> easily, though. >> the debt ceiling is still around. you are still dealing with that and, of course, the sequester issue. there are a lot of questions about what happens. we're speccing to run into that debt ceiling sometime between february 15th and march 1st. in the meantime, let's talk about corporate news. aig is suiciding maiden lane over lawsuit rights. it's the federal vehicle created during aig's bailout.

at issue is whether the insurer transferred its rights to sue for losses that it incurred on its troubled bonds when it sold $2 billion in securities to the fed in 20308. aig is preserving its right to sue the federal government and other debts. >> fed chairman ben bernanke is going to speak and answer questions at the university of michigan. in d.c., president obama is said to be forging ahead on a wide ranging plan to overhaul the immigration plan this year. this includes a path to citizenship for illegal immigrants already in the country. immigrants would have to pay fines and back taxes. it would require businesses to veri verify employees in the country legally. the president will lay out his

annual state of the u.n. address set for february 12th. >> let's take a look at the markets this morning. at this point, the futures outlook is mixed. dow and s&p 500 futures are both indicated higher. fass dak futures are indicated slightly down, down by just over 7 points and i wonder if part of that is because of what is happening with apple. that sdun does the make up a big part of the post shares percentage. if you take a look at europe this morning, you'll see that it was at this point the averages there above fair value are trading higher in the early trade there. in france, cac is up by .4%. germany the dax is up by .6%. the ftse is lightly higher bay few points in london. in asia overnight, you'll see that the hang seng endeded up by almost 150 points. in australia, the all ordinaries up by .25%. the shanghai was up by better than 3%. oil prices up slightly, about 60

cents to $94.15. the ten-year note at this point in the united states is yielding 1.85%. the dollar this morning, a lot of questions about the debt ceiling and what happened and whether or not that will put pressure on the u.s. dollar. but you can see right now, the dollar is down against the euro, which is back up at 1.3361. the dollar is up against the yen, 89.31. and gold prices this morning have gained a little bit of ground. up $7.70 to $1,668730. right now it's time for the global markets report. let's get over to kelly evans would is standing by in london. >> kelly, good morning. becky, good morning. i heard joe's comment about my hair. i will get back to that later, but i will say it was snowing earlier. it's beautiful. but that's not responsible for any notable change in look. just take a quick look at what's been happening wind me in europe. we're in the green for the most part behind bigger than expected industrial production. i wanted to show smu stocks because it's merger news monday.

you guys have briefly mentioned a couple of these. down there, you can see swatch is up 3.8% after saying it's going to buy the julie business harry winston. we saw harry winston at the golden globes last night or at least you guys did. i certainly wasn't up. generali,'s new ceo looking to shed capital shares. markets not responding positively. generali down .8%. fiat, there are a couple upgrades out but also they're going to be in a tie-up with china to produce jeeps for the chinese domestic markets. fiat up more than 6%. tnt express up about 40%. u.p.s. came out about a year ago and bid for tnt.

their offer, 950 a share. u.p.s. now this morning saying eu commission, the european union body is basically saying no-go with the deal. it was sproefd to close towards the end of the last year. obviously, hasn't happened. today you can see the shares down 40%. this company is going to need a new ceo, a new strategic vision. and its biggest shareholder down about .3% on the news. fedex declined to comment this morning. now let's turn our attention briefly to this. it gives us a sense of this mentality of the crisis being over, that it's kind of gripped investors to keep hearing the bullish comments we have on people in the program. spain's ten-year still below 5% even though we're seeing prices down this morning and the yield for the ten-year in italy down 4.2. quick look at the euro/dollar which is benefiting here and has been doing pretty well of late. 1.3359.

adding another .1%. just for joe, i'm going to skip talking about the yen today and that's in part because the nikkei is closed. back to you guys. >> i thought you were going to reference your -- is that a golden -- were you at the gold b globes? that looks like you paid someone a lot of money for that new hair do, right? >> though. it's growing out a little bit so it didn't sit the same way it usually does. becky knows what this is like. i have very curly hair naturally and that's a pain on a daily basis. >> that's what i've been telling him. actually, you know that with your hair, too. >> i know that. you don't want to be a woman. >> the hair has a mind of its own. joe knows this. >> yes. so it was humid or it was snowing or whatever. all right. >> i am a human barometer of what's going on outside. you have to look at my hair and you'll know. all right. not a therm monthly ter, but with humidity. >> remember when we did that show in miami and the one in atlanta?

>> i go to d.c. and i get stop dyeing your hair. i know. we live and die by the hair. coming up. a lot on the detroit auto show. a top bmw executive is going to join phil lebeau. if you went to bed early last night, it was important. >> the golden globes were fantastic. >> did you see ben affleck sthp. >> yes. >> and steve iger. >> iran hostage drama "argo" won best movie drama. the musical and one of the universal films "les mis" won the contest for best comedy or musical as well as acting award for hugh jackman and ann hathway. and lincoln got only one golden

globe out of seven because they found out he wasn't wearing that hat. >> bill clinton showed up, too. >> did he? >> yeah. >> he got the win. more importantly, duke lost to the wolf pack. they were undefeated and michigan lost to ohio state. so then you saw the falcons finally got off. >> and the patriots won? >> the patriots looked pretty good. >> it was a one-point gain, right? >> it was 30 seconds. anyway, we'll be back. i had to end with some sports after that hollywood dribble. this is america.

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welcome back to "squawk box" this morning. dow looks like it would open up about 15 points higher. s&p 500 would open up almost 2 points higher. the nasdaq is off slightly, maybe 7 points, and we think that's a function of what's going on with apple. gasoline prices rising in the last three weeks for the first time since early october. refineries passing on the cost of higher crude oil prices. a gallon of regular unleaded now averaging $3.32 per gallon, up more than 6 cents from daes late december. let's get to today's national weather forecast. joining us now from the weather channel is mike seidel. good morning. >> good morning. we have a rainey start in the

northeast here today ushering in koehler air as we turn the temperatures back to something more typical. it's 53 in new york city and highs the rest of the week will be closer to average. there's that front coming through. nothing you have to worry about as far as shoveling. here comes the colder air. today, buffalo, 36, still above average. new york city, you'll start off in the 50s and fall with rain this afternoon. count on more delays. probably not as extensive at the airports as they were yesterday because of all the fog. southeast, mid-atlantic, rain extending back towards atlanta. heavier rain around atlanta. some areas here in the appalachians and north georgia and the carolinas could get as much as 3 inches of rainfall. jackson, little rock gets a little bit of snow, otherwise rain and thunder along the front. south and east of the front, if you're head to go florida, it's going to stay warm. temperatures are going to be -- i don't know why somebody is adjusting my camera, but bear

with us. temperatures in there are will stay in the low 80s and it will stay that way most of the week. the cold air will never get down to the sunshine state. meanwhile, in chicago, back to reality. 29 is about average. colder than average in minneapolis. denver warms up and the broncos are playing golf somewhere nice and warm. meanwhile, in the west a little bit of snow. tt temperatures in the west warming up in the southwest with temperatures affecting the fruit and citrus crops again this morning. wrapping up in new york city, a pretty good week ahead. basically your average high now at 38. so no complaints. joe, back to you. >> so those were flurries out in colorado? is it real snow? what's happening? is it coming? >> just a little bit of light snow. no, not the snow you skiers want. nothing in the wards this week. a rather dry weak and a week that doesn't feature a lot of

storminess in the lower 48. >> okay. all right. we've got a lot of fog back here, too. at this point, some of the business bugs in the missed have been been seen. >> no. and we'll keep the wipers going to keep the bugs off. >> these bugs -- >> they just may break your wipers. >> and there's people that put them in webs and they're up there. >> poisonous, too. >> disgusting. thank you. see you later. i think that was not a real -- not a true story. >> let's talk cars, b 34 ws. >> can you get a zip car bmw? >> you can. maybe we can talk about that, too. bmw took the luxury sales car beating out mercedes benz in the u.s. today at the auto show, they're unveiling a concept car.

phil lebeau joins us with a first on cnbc interview. phil. >> good morning, andrew. we have joined by the president and ceo of bmw north america. here it is, the 4 series. a lot of people at home might say, wait a second, we're hearing an even number with the bmw? >> traditionally, we have names like the coupe, the two-door concept is only with numbers. but the three gear, it's -- you see right away, this is a different car. if you look at the led light connecting -- >> but it's different than the three series and that's why you felt the need to differentiate. >> absolutely. >> when you look at your sales this last year, up 13.5%. it's ahead of the overall market. but it raises the question is the luxury market, can it

continue to grow as quickly as it is here in north america? >> well, we are quite confident. it always has been around 11 much 5% to 12% of the total motorcycles. the total market is rising again. we're pretty sure the total market -- >> any chance of getting it up in that 13%, 14%? >> i think so, yes. if you look at time back, it always has been rather between 11 mers and 12%. >> a number of people in the industry are worried about the lower end of the luxury market. the three series. . i know you now have the one series which you consider a niche vick here in north america. but is it dloout diluting every other luxury brand? in other words, every other vehicle you sell here in the u.s. is a 3 brand. and are the other models diluting the name series? >> not with bmw. the 3 series is the bmw. it always has been every other

car that we sell way back since the 70s. so it's nothing special these days that we're selling three series so well. it's the segment leader and we're proud of it. >> do you feel like you have to put more money on the hood so to speak because of the competition you're seeing out there, coming in on those lower -- not entry levels, but the lower level luxuries? >> no, definitely not. it's really, really selling well. >> ludwig, thank you so much. we have a slew of interviews coming from you later today. coming up, you'll hear from mike mulal mulally. >> and, phil, we will be back with you in less than an hour. thank you very much and thank you to your guest, as well. when we come back, a cnbc special report, tax hikes. where did the money go? americans probably noticing less

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. u.s. equity futures this morning indicated up some 12 points or so, 13 points on the dow jones. and major averages were up for a second straight week. we'll have a slew of earnings report coming this week. joining us now is jeff clinetopp at lpl financial. on the economy, dick hoey. jeff, it's going to start with you because i'm interested to see we could have not just a lower than expected increase in earnings this year, but maybe even a negative year since aus

thegs companies and profit margin is were peaking. is it possible the s&p earnings do not grow this year? >> there's a distinct possibility earnings don't grow. our expectation is they grow a very small amount, but a lot of that is coming from share buyback these year. this quicker alone is a testament to that. this fourth quarter, supposed to be the lowest earnings dollar total for any of the quarters of last year. that's not the way it's supposed to work. fourth quarters is supposed to be the highest earnings total. but we've got that uncertainty lingering for 2012. this week, we'll hear from a lot of the fms. they have the highest earnings expectations for 2013.

mortgages are doing well. but the less favorable -- >> and we know how difficult it has been to grow revenues year over year. so that's difficult and you had the best you're going to see in terms of input costs and the best you're going to see in terms of margins. i guess it is possible that there could be some disappointment in the actual earnings number. so i don't know whether you view the pe multiple as expensive right now. because it doesn't -- even if we did see earnings flat, it doesn't mean the multiples are going down. >> that's right. at 13 times earnings, it's relatively inexpensive, certainly versus history. do you see a big move of investors into the market. in fact, in the latest week, there is more money. investors ten to rely on that.

we have a long way before investors are returning to stocks. >> earnings and corporate balances, that's not necessarily that you would talk about, but given that the housing market seems to be healing a little bit and the consumer seems to be doing a little bit, would you be surprised to see a down year nernings? >> i would be surprised to see that. i expect we'll have better growth, near 3% in the second half of the year. >> for gdp. >> and that that pays or even better in 2014. let me point out that the bears have been arguing that 2012 wait until we get the earnings disappointment and the consensus growth wait fort fourth quarter is doing to about 12%.

i didn't notice the stock market craving on that yesterday. but the interesting case was it did. >> the market was wrong and i think the reason the market is wreng is it's looking out to reduce tail risks. the european financial.system did not blow up the. china did not go into a hard landing and the fiscal cliff did not blow up the u.s. economy. so guess what? the stock market is up as the consensus earnings estimate has come down. and so the bear aurchlt lacks an intellectual continuity where they were right on the earnings estimates come down, but they've

goes to explain. so you think the as specs further identity are improving as we got past the tax cliff. we're going to get past the spending clip in an ugly way. you have to depend on washington, d.c. to give you some banana republic action before we get to the middle of 2013. but in the middle of 2013, we'll know what all of the rules are. and i think the capital spending orders are going to come back and reinforce the housing improvement that you described as well as a pretty good auto market. >> we are talking all day today because everybody got their paycheck and it is definitely smaller. it's always smaller t beginning of the year. but is there any way that there is a headwind from people just not having as much money? >> yes, there's a headwind for the economy and we're not in a

weak fizz from the yes. you'll probably be a touch better in the first quarter of consumptions being first down. but keep in mind, there will two different parts of america. middle class is being squeezed by this one time social security normalization. that is normal. but at the upper income of level, their stock wealth has taken off in the last two to three years. so yes, they can say i got a i whatter tax rate, gee these people are making $1,000 and -- and that sthot going to be weak

in the tefrt part of the your. >> gist glg tth. object our outlook last year was due to confidence. i think certainly consumers have the ability to buy more on chris own there iter them to resolve anything this year. we're going to kick the can down the road. we have a few more left to do in the first quarter. i think it's going to keep a lid on confidence, keep a lid on consumer spending and business investment. we sure saw that pullback in the third quarter and to some degree in the fourth quarter, as well. if businesses continue to sit on their hands, there will be no improvement. >> that's why i disagree. i think the business economy will improve 2349 second half.

i think capital spending will come back really fast in 2013. that's a critical difference. and there's a difference in the economy, as well. >> both of you are in command. it's all for 400. >> you can't own stocks, except for the "new york times," which has gone down. >> and i'm allowed to own comcast 37. >> okay. but you have to feel a headwind, given that most of your income is above 400. >> it's a big problem. >> i think you'll feel better if g ge makes its back to its own highs? >> so i had need on be reincarnated? >> yes. >> i'm going to come back as andrew, loaded, wealthy, drivers. anyway, thanks, jeff. >> as we were just talking about, a lot of americans had an opportunity to absorb the fact

that they are getting less in their paychecks. the big portion of that is going to social security. ayman explores why the agency needs more of your money. aman. >> good morning, becky. it was the tax cuts that both parties love to make. this was originally put in place two years ago as a measure designed to boost the economy. it would reduce the fica taxes. but as far as of it ending at the end of legislature last year, it's going to pay about $46 every two week paycheck more in taxes. that's going to have a real impact. they didn't like the fact that it was diverting revenue away from social security.

and projected $112 billion in 2012. so that was the cost of extending this thing. and during this debate that we all saw here in washington, they decided that cost wasn't worth paying any more, guys. >> we were just sitting here talking about this tax issue. everything you talked about the last time and the idea that, yes, we know the social security tax is going to go higher. i'm a little offput by all the people saying, oh, my gosh, my taxes went up. no, your taxes went back to where they were before. >> if you look at a person making $60,000 a year, do they notice that $46 hit out of every

paycheck, getting paid biweekly? and people like me who manage their finances in fairly oblivious way, i have to idea what's going on, they might want notice that. but it is real money coming out of the economy. one estimate was something like 0.5% of gdp in terms of a headwind going into 201338 ever. part of the issue is the fight here in washington was so much focused in the mead use and the headlines on the tax increases for the risk, that a lot of people below that level didn't pay much attention and thought, hey, this isn't going to affect me. well, it did. >> thank you. you brought us the stoir blit happened. thank you for pointing out what people are start to go pay

attention to now. and we will thank you later. >> and the hat, right? >> and thin at the top of the history, gary parr will be our special guest. at farmers, we make you smarter about insurance.

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some retailers are worried. joining us right now is peter tee, senior research analyst at joffrey's. and i don't have any microphone

on. hang on. >> we can take it from here in the meantime. good morning. >> good morning. >> becky had a microphone issue. >> the peter, i'm sorry about that. we were talking about the higher payroll taxes that have kicked in and how it came as a surprise to a lot of consumers. >> that's right. yeah. >> retailers have known this was coming. will it actually impact spending? >> yeah, i think there will be some modest impact on consumer spending. the overall stats, the average household gets about $1,000 less. anywhere from $18 to $20 per week. it's a sneaky change that a lot of people weren't expecting. probably going to have some impact. it's difficult to say because it's unclear how much was saved and how much was spent when the original tax credit fight began at the beginning of 2011 is. but what we get most concerned about would be at the lower end income of the spectrum where consumers live on more of a

month to month budget. most of that tax credit was spent and nowite coming away, that's less money for a lot of the retailers that indicator to that demographic. >> in my coverage universe, that would be the dollar stores, specifically, dollar general or dollar tree or dollar general would be the three that we think would be most negatively impacted. >> what about walmart? >> i don't cover walmart, but yes. >> and target? >> targets can be a little bit more middle income. we think that down the income spectrum -- >> i would think it would be the opposite. >> you mean you get a walmart shopper that brings -- >> sometimes when the economy is lousy, mcdonald's does very well, right? >> yes. >> that type of thinking, no? >> want, k, there's the trade down argument. even family dollar, when asked about their guidance for the

year they said no. they know their core customer does but, but it's more someone that is afraiding r of losing their job. we don't think it changes consumer behavior enough to go somewhere else. it changes people to buy less. >> meaning it will be subtle if you're somebody who is not living paycheck to paycheck, you may not notice it. but if you were living pay they can ch ek to paycheck, you're going to feel it. >> and you're talking about middle income, so someone who is $50,000, $60,000, $70,000 a year you'll notice it. >> so do us don't buy these stocks as a result? >> the valuations are starting to pull in. now it becomes an argument of

how much are they going to be negatively impacted? this is sort of the first change since 20309 where that income demographic now has less money year on year. there's been a number of stimulus measures over the last set of years that that has gone on. >> peter, thank you very much for joining us this morning. >> my pleasure. >> by the way, at 8:30 a.m., we will be speaking with the ceo of family dollar. >> but first next up, cnbc sports. brian shactman will join us in the chairs right after this break. i have low testosterone. there, i said it.

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we are doing sports in chairs this morning with brian shactman. what a great -- this is the best weekend for the nfl. >> they say it really is. and it's like -- >> did not disappoint. >> it's like march madness when you get fewer games it gets harder to deal with it and now you have two, then you have two weeks, then you have one. in terms of story lines we again have two brothers that can be in the super bowl when you have baltimore and san francisco. you have the new england patriots. they go to the super bowl, it's six for brady.

if they win it's four. he joins bradshaw and montana. if he loses he'll then be 3-3, though. what does that mean to his legacy? the one thing i want to bring up to you guys, from a business perspective, atlanta has the most to deal with here, they are the only one of the four remaining teams that's valued at less than a billion. they're trying to get a new stadium and they want public funding and this in tax environment, they say the only way to really enhance your value is to leverage this kind of victory if they won the super bowl to get a new stadium, and they're right on the cusp of it. they're having that conversation with it. and they're the only team left that haven't won it. and then you have ray lewis, who was, you know, charged with murder 12 years ago. >> right. >> and now he's like the beacon of respect in the nfl. >> it's -- for me it's hard to get past my preconceived notions. i don't think the ravens belong, i hate to say that, where, you know, i think they're going to have a hard time getting past new england. and i also think atlanta's going to have a hard time getting past

san francisco, don't you? >> i think the san francisco, in many ways -- >> did you watch that? >> yeah. they are good. it's funny, they say colin kaepernick and rg three are transforming the game of football. at 180 plus yards rushing. how can you do that for ten years? >> and then i think new england's defense trying to stop the 49ers makes me think, i hate to say that with respect to bob craft but that was a great ending for seattle. wasn't it? because you got to see russell millsen and he did not -- he did everything that was ek expected of him except he left 30 -- they got in the end zone too quickly. they left 31 seconds -- >> yeah. i mean -- i went out to walk the dog, no, no, so i got the field goal and it was 33 and i was like, 30 seconds. >> game's over. >> and i just did a refresh on the blackberry, and they have the result. and i'm like -- different thankfully. it was unbelievable. >> the return on the kickoff he got to about the 40. it was like oh, my god.

possible. and then you saw pete carroll call a time-out. >> i don't know what to do with that. >> are you a giant fan? >> no, i'm a -- my loyalty -- >> no my loyalty falls with the jets because -- >> my loyalty falls with the jets. >> when can we start talking about basketball? >> almost not too soon. >> he's already ready for march madness. >> two undefeated teams went down this past weekend. that's one thing that's huge. i don't really pay attention. >> you got to, though. >> i'm paying attention this year. >> he's ready for the brackets. >> when the brackets come -- >> he's trying to prepare. >> i am. >> the one thing i do want to bring up with you guys is lance. >> yes. >> we talked about that earlier. >> i don't want to sea -- >> i'm so bitter i don't even want to weigh in on this. >> here's what i don't understand. he's going to go on oprah, right? we're going to see it thursday? i think they're taping it today. it's going to go on thursday. if he actually admits it, he could go to jail. >> well -- >> right?

>> there's obviously that possibility to discuss. i think the key is he's worth over $100 million. he didn't lawyer this decision up, so i'm sure he knows what the potential impact here is, and they're trying to talk about why. okay? why now? some people say he just wants to compete again and he just wants to be able to compete. >> can't be that. first of all, it's going to be seven years -- >> unless they -- >> why would they -- >> what he did to anyone that went up against him, and these are guys that were superstars that don't have -- that aren't dating supermodels. he came on this show and ask one question. he saw charlie in a bar and wanted to fight him. the self-righteous, pious, and he had the cancer thing which gave him all of this -- i'm so finished. >> you know what's so funny -- >> $100 million for pr and lawyers now. he's just -- what an individual. >> brian, thank you for coming in. eve got to wrap this up. thank you we appreciate it. when we come back we're going to talk about shares of apple that dipped below $500 a share in early trade this morning before bouncing back.

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wheeling and dealing. >> let's make a deal. >> our special guest this morning is lazard's gary paar talking about the transformation of big banks, the economy, and where the deals are for 2013. >> going behind the wheel. ford's ceo is here and ready to rev up the company's luxury brand, the lincoln. >> plus, watch your wallets. and your pay stub. >> that's the best lift i've seen you make yet. >> the big tax bite for workers across america and what it means for your money. we are keeping tabs on a story you heard here first. the second hour of "squawk box" begins right now.

welcome back to "squawk box" on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. we've been watching the futures this morning and you can take a look and see right now they're mixed still. dow futures up by about 11.5 points. s&p up 1.25. nasdaq futures are a little lower though and that is because of the big story this morning, and that is apple. >> those shares are under pressure this morning as the company reportedly cuts its component orders for iphone 5 due to weaker than expected demand. sources are telling "the wall street journal" that apple's orders for screens for the first quarter have dropped to roughly half of what they'd previously planned. and apple's also set to cut orders for components other than screens. the move comes at a time when apple faces greater competition from other smart phone makers such as samsung. apple has dipped below the $500 mark in premarket trading this morning and that's the first time that's happened since last february 16th. so, it's like a roller coaster.

i don't know if it comes back up the other way, though. >> why don't we talk about some of other other headlines as well. oracle has released an emergency update to its widely used java web blousing software after the u.s. government urged pc users to disable java last week because of a security vulnerability. oracle says the fix addresses two issues. some experts say the fix does not deal with the other flaws. also bankrupt hostess is selling six bread brands to rival flour foods for $390. that includes wonder bread. hostess has not yet announced winning bidders for its snack brands but that is expected to take place within the next few weeks. and finally u.p.s. is abandoning a nearly $7 billion deal to buy amsterdam's tnt express. that comes on word that european regulators would have rejected the deal as currently -- as it was currently set up. u.p.s. had first offered to buy tnt. europe's secretary largest delivery company last may.

joe doesn't have a microphone either. what is going on? >> i have it right here. president obama is said to be forging ahead on a wide ranging plan to overhaul the u.s. immigration system earlier this year. "new york times" reports that this pass includes -- or the plan includes a plan to citizenship for illegal immigrants already in the country. immigrants seeking legal status would have to pay fines and back taxes and the plan would reportedly require businesses to verify new employees are in the country legally. it could also create a guest worker program for low wage immigrants. the president may lay out the idea during his annual state of the union address set for february 12th. >> okay. it's a new year and new opportunities. so it's time for us to play let's make a deal here on "squawk." our special guest this morning, to talk about the deal making world, the health of the banking industry and also regulation, gary paar, deputy chairman of lazard credit. thank you for coming in. >> thank you. >> haven't seen you in awhile. >> good morning. >> so m&a which used to be my bailiwick but there hasn't been a lot of it for awhile now. >> it's been -- last year was

another relatively slow year for the world it was like 2.7 trillion in activity. >> so if you think of m&a as the ultimate, and i don't know if you agree with me, as the ultimate barometer of confidence in the board room, maybe not the economy or the markets, but in the board room, where are we now? >> some people would hope we're at an inflection point and that is to say it's been roughly around 2.7 trillion of activity for a couple of years, which is rather slow. peak, as you will recall is around 5 trillion. so it's about half. the fourth quarter was last year was quite busy up almost 50% year over year. we're not suggesting that that's going to be there for a huge boom coming, but, a lot of things have -- a lot of the concerns, as you know, fear and confidence were the two things that do drive in the board room and there's more confidence coming in, just the world will be more stable. >> do you think there's an argument to be made that we'll never actually get back to those highs in terms of the amount of transaction activity, in part

because frankly there has been so much consolidation that's happened over the past two decades already, people say we can't get bigger? in the banking world, harder to get bigger. and so many other businesses you talk about the antitrust regulations, u.p.s. today, and this tnt deal falling apart because of regulations. >> right. >> i think never is a long time. so the issues around monopolies and such, government regulators and others are far more cautious and conservative today. the companies are bigger. but that's if you look at certain markets, europe. if you go to other markets, asia, latin america, there's still a lot of room for growth and there's a lot of room for the cross border from those markets. last year, merger activity about 35% of merger activity was outside of the u.s. and europe. >> you work for dick's for us. look in the crystal ball for 2013. industries actually going to be walking up and talking about headline's, and different transactions, where would they be? >> natural resources continues to be a very active variant.

there are a number of countries and governments even that have a desire to have natural resources so that's one. metals, minerals, those are also related. technology is another area where companies have built up large cash pools, any number of companies, large cash pools and are become more active about thinking how to deploy it. and if they were going to do it as a dividend, for example, they would have done it last year, if they're u.s. companies. >> you made your career in the banking business. and also doing m&a in the banking business. is there any m&a to be done in the banking business? >> there will be. but we're a little ways away from it. >> because of the regulations? because of what? >> the confidence is a big part right now. so many banks are still rebuilding and trying to reposition. and let's draw it into different sectors. the very big banks are constrained. they can't buy other banks. so they are limited to your point about size. but in the u.s. there's still 8,000 banks. and this overlay of so much regulation, for example, on the

banks, on the regional banks and smaller banks, once they have recapitalized and repositioned, they're going to feel real pressure to start doing mergers again. >> right. >> but that's a little ways away. >> our a former morgan stanley man. they've been in the news recently given the layoffs. >> yes. >> you have views on what's going to happen there? people say ultimately that's a company that either could be in play or pieces of it could ultimately get pushed around. >> i'd say first i'm delighted that i'm at lazard, and so -- it was a decision i made some years ago, strategic decision. morgan stanley, i think, is a survivor so i don't see a dramatic change like that. i think they have to transform. they had, ten years ago, become very dependent on fixed income. and foreign exchange and kh commodities. in this regulatory environment that's not a good place to be. james foreman's move into retail and other sector so i think that's a meaningful shift for them. >> is the regulatory environment too tight? >> in some number of areas, yes.

in some others, no. so i can actually say mixed answer. in a lot of dodd-frank has to do with things that had nothing to do with the financial crisis. you may remember one of the first laws actually implemented where they wrote the language was debit fees. they capped debit fees. that had nothing to do with anything around the financial crisis. on the other hand things like the volcker rule and others, they're still working on them, and i think there should be some good regulation around capital risk taking, and such, on the trading desks. that's still to come. >> the other big banking wall street news this week is jamie diamond and jpmorgan, i don't know if you follow this, but the london whale, the board, is going to be potentially releasing an internal report on what happened. if you were on the board would you release it? >> i don't know what's in the report. i would think in the end transparency in this environment and something that's been so visible, they're going to need to release, just to have the transparency. whatever the findings were. >> and does that change the equation in terms of then what happens to the volcker rule and

all the other regulations that are still coming? >> i don't think it will change. i think it just adds another bit to the equation as they're trying to finish out the language. >> we're going to continue this conversation. you're sticking around for the next hour. >> for awhile. >> so we have -- >> as long as you'll have me. >> we're thrilled to have you here. >> thank you. >> still to come this morning, if you haven't noticed, a little something extra may have been missing from your pay check. the first one of 2013. so, with less cash going into consumers' pockets, and more in the government coffers, will people change the way they spend their money? that story is coming up. up next, up first on cnbc interview with ford ceo. live from the detroit auto show. his plans to unlock the power of the lincoln brand. ♪ ♪

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welcome back, everybody. take a look at the futures again. we are looking at a mixed picture this morning. dow futures up by 8.5 points. nasdaq futures down by 8.5 points. that's largely because of some concerns about apple.

>> fed chairman ben bernanke is going to be in ann arbor today, scheduled to speak and answer audience and online questions at the university of michigan. the event is set for 4:00 p.m. eastern time. >> japan's transport ministry announcing that it has launched an investigation into the causes behind two fuel leaks on a boeing dreamliner jet joaned by japan airlines. yesterday the airline says that a 787 yuntd going checks in tokyo following a fuel leak at the boston airport last week leaked fuel during tests, as well. if you are a ford shareholder you have plenty to celebrate. the stock sitting at a 52-week high. up 50% in the last six months. ceo alan mulally is focusing his attention on boosting the luxury lincoln brand and phil lebeau joins us live from the detroit auto show in another first on cnbc interview. good morning. >> hey, joe, how are you? >> i'm great. i see alan is there. he's going to be bursting with enthusiasm, as usual, i'm sure.

>> he always is, especially right now, because alan mulally joining us first on cnbc. >> good to see up. >> last week was a heck of a week for you guys. you doubled the dividend. your stock is at a 52-week high. i know ceos don't like to talk about stock prices but do you feel as though you guys really had a rough 2012 in terms of investors, you feel like you're starting to turn that corner a bit? >> well, i think plan is clearly working. we decided to focus on ford and the lincoln brands, and this complete family of best in class vehicles and everything that we see is a point that that plan is working. to your point, very strong operational, financial performance. all new products are being well received. of course being able to increase the dividend with a commitment to sustain that through the economy. >> standard & poor's, talking with analysts, and they say listen, we want to see ford, have a broader return in terms of where the profit's coming from before we give them an

investment grade credit rating. this speaks right to the problem you and other automakers have. europe is a mess, i know you're cleaning it up, and you're still just getting up to speed in asia. how long before you think you can say to them, we have diversified? >> i think to your point, bill, in ford's case, this is a real strength. because as you know, six years ago, we started to make a significant commitment to serving our customers in asia pacific. as well as restructuring europe. so we are clearly ahead of that right now. so i think that as you saw, we're profitable in asia pacific now, restructure just like i did in the united states with europe we're right at the front end of delivering that profitable growth around the world. >> talk a little about lincoln. >> yes. >> about a half hour, 45 minutes you're going to show us the mkc which is a small suv. but a lot of people look at lincoln and they say, you guys have let this atrophy for so long that it's too big of an uphill climb. >> well, that's a really interesting question, phil,

because all of our data says that the brand is very, very strong because of its history. it was a fantastic brand. in ford's case we bought aston martin and jaguar, land rover and volvo so we stopped investing in lincoln. the new one we're going to reveal today is in the c segment that isn't a luxury vehicle in that segment today, an suv. that is the fastest growing segment. you combine that with the mkz in the largest luxury segment we're going to be in the sweet spot of bringing the luxury back. >> but there's so much competition in luxury that can lincoln truly move the deal? >> i certainly think it can. the luxury market worldwide is nearly 8%. they love the lincoln brand in china. our focus is going to be the united states first and then china. and clearly lincoln is a really neat brand. we're really excited about it. >> how much of this when you look at what you're doing with lincoln and ford ultimately the bread and butter is the f-series. we're seeing an interesting divergence in the pickup truck market. where do you see pickup trucks

with the f-series three years from now? >> first of all, i think the full-size pickup is going to be a significant market, especially in the united states. and in ford's case, with the f-series, we've been the industry leader for 36 years. >> right. >> in this last year we actually increased our market share to nearly 40%. and we've got some really neat things to share about a concept vehicle at the ford -- >> i know you're going to be there. >> we'll be there. >> it's reported here first. >> you can't share any details? >> it's going to make your eyes water. 36 years industry leader. >> i'm getting a few details from you. >> look at the ford plan, absolutely committed to quality, fuel efficiency, safety, really smart design and industry leadership 36 years and we're not giving that up. wait till tomorrow. >> you're not going to share any details? >> not until tomorrow. i'm sure it's going to be a first on cnbc. >> one last question, you last week said you're going to be hiring 2200 more people in north america. where do you see ford's market

share settling out? because you're down relative to last year in 2012? >> it's really a neat development. because last year we actually hired nearly 8100 new employees. which is fantastic. because we're properly growing. now we're going to hire another 2200 this year. in market share we were down a little bit. remember we discontinued a number of models. >> right. >> and we were really struggling to increase our production fast enough for the real demand for these vehicles. we're going to be just fine, a little over 15.5% this year. >> is that where you think you settle out in that 15.5 to 16% range? >> i think it's a very competitive market worldwide. our operating margins are very good in the united states. we're not going to buy markets that run the business and generate profitablety over long-term. >> so that point. highers profit margins ever in the third quarters. >> absolutely. >> alan mulally the ceo of ford motor company joining us first on cnbc. guys, we will be here tomorrow, lots of rumors floating around about what you guys are going to

talk about. >> going to be exciting. >> thank you for that. appreciate it very much. coming up the championship sunday is set. we have highlights and the match-ups after the break. plus, could less cash in the pockets of consumers mean a cutback in spending on vacations? dining out, or even groceries? find out as "squawk box" continues. at 1:45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at getwellduck.com.

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in football the stage is set for a championship weekend. the atlanta falcons came back to beat the seattle seahawks in the final seconds of regulation play. they'll now host the 49ers for the right to go to the super bowl. and tom brady and the patriots will face the baltimore ravens in the afc championships after the patriots beat the texans 41-28. also this morning we have a little bit of golf news for you. tiger woods says he is back and looking forward to his first tournament of 2013 next week. tiger's going to be starting his season on the european tour at the abu dhabi hsbc championship. his pga tour will open near san diego at the farmer's insurance

open. tiger is currently ranked third in the world behind rory mcilroy and luke donald. >> you got any comments, questions about anything you see here on "squawk," here's the e-mail, "squawk"@cnbc.com. still to come, much more from the global markets this morning and we're going to talk to our guest host gary paar, and then at the top of the hour we're going to welcome business insider ceo henry blodget. facebook's big announcement coming tomorrow, and apple's future as we have all of this news about apple this morning. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today.

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welcome back to "squawk box" on this monday morning. in the headlines, gasoline prices are on the rise for the first time in more than three months. the latest lundberg survey shows a 67.5 cent gallon increase now up to $3.32 a gallon.

the release of microsoft's windows 8 didn't doch for pc sales over the holidays. new figures are showing a 4.3% drop in fourth quarter pc sales, compared to last year. and this as consumers increasingly are shifting towards tablets and smart phones. finally "zero dark thirty" topped the weekend box office with $24 million in north american ticket sales. "a haunted house"dy beaued in second place while "gangster squad" came in third. >> the nation's largest banks are set to update wall street on the latest earnings amid the flood of new regulations. joining us from washington, eugene ludwig, ceo of promontory financial group and former controller of the currency and our special guest gary paar. welcome. >> good to see you. >> gary paar already noted that you can definitely still feel the adverse effects of the regulatory environment on a lot of financials, which is not what

we need when we're trying to grow the economy. >> yeah, joe, i think we have a pig in the pipe problem and we'll have that for the next year, 2013 being a very big year. that is the pig is the regulations. and as they work their way through the pipe we're still going to see drag on financial stock, financial earnings. >> and it's -- i mean rates being low, it's a double-edged sword, i guess. but that probably masks some of the problems that we'd be seeing if rates weren't as low. is that -- >> well, the low rates also put a drag on bank earnings. but i'm very bullish in the long run. i think that the pig will get through the pithen, we will get these rules settled. as interest rates continue to come back the margin for these institutions will increase. in addition, they're all focusing on efficiency, new technologies, so over the long-term i see an upward trend. >> do we need banks to be able

to buy other banks to get things cranking again? that's something that gary brought up, as well. or is that just a thing of the past? >> i heard gary make that comment. i totally agree with him. i think that we're going to see a wave of consolidation. whether it's eight months out or 18 months out the fact of the matter is you get real cost take-out and for the very smallest institutions, these new rules are burdensome. it's hard to make it work if you're a teen institution with these new rules and there's going to be a lot of consolidation over the medium term. >> i think of financial stocks and how they were great performers last year and then i look at the absolute levels of the stocks and they're just so far from where they were in the heady days prior to the financial crisis. do you think they can have a repeat performance this year, gene? >> you don't want to be pollyannaish here.

they've got to get the pig through the python, that interest margin has to come back. i think the good news here is that if these rules do increase financial stability, and i think they will, they're not drawn too tight, so that you push things out in to the shadow banking system too aggressively, then i think we see more stable earnings patterns, and i think the markets will reward them. this is going to be a big year. 2013 may be the most consequential year in regulation we've seen in decades. dodd-frank was an outline of what the rules ought to be. this is the year many of the rules get implemented. >> gene i'm interested on the, you can advise the banks on dealing with this regulation. how much do you think the u.s. banking industry has been spending to deal with all the regulations that are coming? and will there be a peak in that? will it decline out in the future? >> absolutely, gary. it's billions and billions, indeed. hundreds of billions of dollars spent on the new regulations

integrating the new rules, new technology to accommodate the new rules. that is the big in the python and that will work its way through. and that will decline. >> gene, do you -- a lot of times i think about the view of the obama administration towards the financial sector itself, and i can remember some comments like yeah, you're entitled to a profit but you're not entitled to this huge profit. i think the view of a lot of people in the administration have towards the financial sector, where it's almost seen as not a partner in growing the economy, but almost an impediment to it. do you think we're going to have another four years where they really don't understand how important it is for the financial sector to, you know, to grease the skids for the economy overall? >> well, you know, the regulatory pendulum and attitudes all swing. when there's a crisis it tends to sbing to conservative attitudes, to restraining

attitudes and that's what we've seen. we saw it in the '30s, in the late 1980s, early 1990s. but it all always tends to moderate because the financial system is so critical to the well-being of the economy that over time one really has to have a moderate approach to the industry. that will come. now, i can't say that the pendulum has swung as far as it will go. there may be a little further to go. but we're pretty much as conservative as i think we're going to be. and i think we're much more likely to see the pendulum swing back towards moderation, towards a pro-growth approach. >> i just wondered whether the -- you know, the mortgage, you know, all of the litigation we've seen and all the settlements, and the billions and billions and billions that i see that the country is -- or that the industry has kind of had to pay up. that's money that's not going to be lent for new mortgages, right? that's part of the problem that the credit is still constrained as they're still dealing with a lot of the aftereffects of the

last time. >> well, the country is healing itself. these constant enforcement actions don't go on forever. oh, there's always an enforcement action. but, this is an aftermath of the crisis. the pig will get through the python, it always does. and really, think it's more a matter of time than it is a matter of, you know, results. now, the equipoise of this swinging pendulum will be different this time. it is clear that the banking industry, the regulated industry, will have a more constraining set of rules. that's why 2013 is such a critical year. how constraining that is or it isn't. how much is shifted out to the shadow banking system or not. this is a big deal. but the pendulum will shift back, even if it's at a different equipoise, and that will mean more lending and more economic activity. >> and what is -- what's volcker going to finally look like? do you hear what it's finally going to consist of? >> well, the regulators have

been very wise in slowing it down to get it right, rather than get it quickly. and the big fight is over market making and hedging. the volcker rule said no proprietary trading. that's what congress said. with two big exceptions. you can proprietary trade in market shaking. and you can proprietary trade in hedging. very wise ideas because market making is essential to the economy. and hedging is essential to safety. but how much the regulators draw that noose, how tightly and there are different views in the regulatory committee is absolutely critical. >> gene, gary has said when you're trying to define what a prop trade is it's next to impossible. it's going to muddle the issue even more. >> you're absolutely right, becky. it's sort of like potter stewart what he said about pornography, you know, you know it when you see it. here, i would hope that the regulators would do this by way of supervision. taking a look, not having rules that are sort of rigid, bright

lines here so we can let the industry settle out and support the economy. >> gene, real quick on just that issue. banks have already obviously made lots of moves around what they think the volcker issue is going to be. how much actual fundamental structural changes do you still see out there happening after it gets implemented? >> well, it depends on the rule. they have made a lot of changes. a lot of the proprietary desks that made a good deal of money have already been pushed out. in some cases pushed out for over a year. but, how much market making activity they can do, how much hedging, macro hedging they can do, is still unclear. and one could see a good deal more tightening. i hope not. and it may be that we're just about there. >> okay, gene we appreciate it. gene ludwig joining us and gary parr will be with us for the rest of the hour. just thinking about pythons, and south florida.

you seen how many pythons -- >> yes, how many they're going after and catching down there. >> and they're eating like pets. >> oh. they've got a big, big problem. >> they're everywhere. >> the everglades, they get in and go all over the place. >> and they grow, andrew. they grow. i don't know what i want you to say. >> what do you want me to say? >> speaking of pythons. it's a good image. >> it is. >> okay. >> good morning. >> their jaws unhinge. it's weird. they don't really chew anything. they slowly -- >> okay, okay. >> go through -- >> yeah. >> breakfast, everybody. >> hair -- >> okay. enough, enough. let's talk about something that's almost as painful for anybody looking at their paycheck from last week. american consumers missing some cash but will it mean less shopping, traveling, saving or investing? with some careful planning to cut expenses and increase earnings the tax bite may not be such a blow. sharon epperson joins us now from new york with some ways to try and find some money to offset the payroll tax hike.

sharon, good morning. >> good morning, becky. you know, for the average consumer it's going to take a lot more discipline than ever to offset this payroll tax hike but there's some ways to find extra money to do so. financial advisers and credit counselors suggest you start with the irs. millions of americans get huge income tax refunds every year when they could have extra money every month. money that they really need for everyday expenses and you need to figure out the proper number of withholding allowances you should claim by using the work sheet on the irs website. if you have a qualifying retirement plan at work, now is the time to make sure you're contributing the maximum amount. you'll reduce your taxable wages by the amount you put in. you can save up to $17,500 in your 401(k) this year. that's a 3% increase from 2012 and those 50 and over can add an extra catch-up contribution of $5500 for a total of $23,000. you also want to examine all of your property and casualty and life insurance policies and compare rates. and ask your insurance agent

about the rate to lower premiums, and ask for discounts for loyalty and good driving and ways to bundle multiple policies. getting a second opinion from another agent will help to make sure you're getting the best rate. and of course, mortgage rates are still at historic lows but you don't want to keep wages from going even lower. take advantage of the low rates now to lower your monthny mortgage payment, and use an online calculator like bankrate.com tat can tell you how much you can save by getting a better rate on your mortgage. you don't want to keep paying all the fees you have. mainly banking fees. fees you no longer need. all the things automated, get rid of those and negotiate with your bank for lower fees on your account or change banks altogether. you want to avoid unnecessary charges using out-of-network atms and pay the lowest rate possible on your credit card. of course it helps if you have a strong credit score to be able to do that. lowering investment fees can also be key. and when you think about index funds or exchange traded funds often the fees are much lower than actively managed funds. that's another way to go.

no one really wants to get a second job out there, especially if you have to pay the social security payroll tax on that money, too. but if you're getting paid for something fun that's not going to feel like work, scoring possibly another career path that may prove priceless and may be another way to boost your income. more ways to do that on cnbc.com. >> sharon, thank you. >> i care a lot. >> -- banks as well. we appreciate it and we will talk to you again soon. when we come back the ceo of family dollar stores takes payroll taxes and the consumer and figures out what it means for his business. stick around. also, coming up, we have some final thoughts from our special guest gary parr and in the next hour, what facebook may have up its sleeve. guest host and tech industry watcher henry blodget is here. checking on the futures again this morning we have been looking at a mixed picture until now. at this point red arrows across the board. s&p futures down by less than a point. dow futures down by about 3.5 and the nasdaq is down by just over 11. oil prices this morning have been a little bit higher.

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welcome back to "squawk." look at futures right now. we do have red arrows. nasdaq off by 12 minutes. we had some news earlier that apple might be cutting some of its component parts orders for component parts and that's putting pressure on that stock. dow off about four points, s&p off just marginally. take a look at shares of transocean in premarket trading this morning. company disclosing that billionaire activist investor carl icahn has acquired nearly

1.6% stake in that company and that he's looking to increase that holding. the yore shore rig contractor says icahn is seeking regulatory approval to acquire shares worth more than $682 million. in washington news it doesn't look like there's going to be a trillion dollar platinum coin. the treasury department says it will not produce platinum coins as a way of generating a trillion dollars in revenue and avoiding that battle with congress over raising the debt ceiling. the fed coming to the same conclusion about the idea. it had been that they were thinking a platinum coin, they could mint that and then treasury would mint it from the precious metal and the value would be placed at a trillion dollars and the fed would deposit the coin in the treasury account, and credit the account one trillion which could be used to pay the nation's bills. the united states is expected to reach its authorized debt limit of $16.4 trillion next month. our special guest this hour is gary parr, vice chairman as

lazard freyere and we've been talking off set about the debt ceiling and what it has meant for business and confidence. but there are some potentially good things that could come out of this if washington really gets its act together. what are some of those things that you think could actually help out and bring in taxes, promote growth. >> right, one of them, one of the discussion topics has been all of the cash that's trapped overseas from major corporations. the number is on the magnitude of $2.1 trillion. the idea of having an excise tax applied to that if companies want to bring it back to the u.s. has been discussed. the benefit in the short term is the cash would come back into the u.s. economy. the second is, it would generate immediate tax revenue. that is a bit of a short-sighted view on the tax side. but nevertheless it's something the politicians are doing. if that were the case, we have a lot of companies saying they would bring cash back. if the excise tax is a reasonable level. >> what's a renal level? >> between 4 and 9%?

that's a good size number. so it generates meaningful revenue to the u.s. but, it could bring in well over a trillion dollars into the u.s. economy. which corporations will use either for share buybacks, dividends, redeployment of capital for mergers and acquisitions. >> we talk about how a lot of corporate executives would like to see just an overhaul of corporate taxes altogether. make it simpler. something that makes more sense, more equitable across the board. they'd be willing to give on things if they could get a better idea and a more equitable tax code. some people say at this point the idea of an overhaul of the whole thing this year, no way, after all the big debates and everything that's happened. is that why we're talking about one-offs again? >> i think so. certainly doing an overhaul takes a long time and a lot of discussion. and everything is shaping up for this debate is going to be near the end of february, and it's going to happen in the last hour and you can't do an overhaul in that. you can only do very specific targeted decisions. >> but the idea of a payroll tax

holiday, most of the people who would like to see something don't want it to be a payroll tax holiday. they want it to be permanent. >> right. >> you're never going to get an agreement on both sides of the aisle on that? >> i have no idea. what gets done in the eleventh hour is always tough to predict with politicians. >> but you think that this one is reasonably likely -- >> this one is being -- >> democrats and republicans can both -- >> they can each see something in it where from the democratic point of view is generating further revenue. from the republicans, it's not quite the same as other issues they care more about on the tax front. so it's a possibility. it's one of those tail issues, when you look at the low probability outcomes this one could have a meaningful second order positive consequence. >> right. >> with the -- how important is the treasury secretary in setting policy, do you think? does he just follow along with what the president has already said he's going to do? or will he actually skew us further -- >> you're referring to the future next? >> yeah, and whether that

lessens the possibility of anything like this happening. >> once again, hard to know in politics and negotiations. i know the president listens to him, so he's been an adviser to the president for some time. but how that ends up playing through, and again congress, of course, gets to weigh in here. so i -- >> you advise a lot of governments, right? >> yes. >> you worked with the greek government. >> we have. >> you're not saying whether you worked with the ecb or not. >> it's been out there. >> so, but is jack lew the right guy, then? i mean just knowing what you know about dealing with governments, and policies -- >> i think it's interesting. there are different characteristics you look for in a treasury secretary at different points in time. so, for example, during financial crisis, it was a really good thing that the treasury secretary had experience on wall street and understood how wall street, how markets worked, how to pump lick witty. arguably now is the time where having a treasury secretary -- >> -- how government works. >> that's right. who knows how government works. who knows how to navigate government. i could make the case that's a

good set of characteristics. >> we've got a lot of guys that know government now. not a lot that know the private sector. that is what we need to know now. >> that would be the case. >> god bless them. >> let them all work together. >> can i ask a banking question? we were talking during one of the breaks, i figure we should raise the conversation on the air, the banking business, all these layoffs that are continuing, the change in pay, that it has not ended yet. and that it's actually going to get worse before it gets better. >> i think it will continue to be bad and get worse, yes. the industry is going through more change now than since the 1930s. and it's because ofregulation, and also the capital requirements. and these capital requirements, you know, the last 30 years a lot of the wall street rise was driven by fixed income and the fixed -- if you look at the major firms, the growth engine was fixed income, commodities, foreign exchange. with the capital rules, the volcker rule will spill over into fixed income as well. it's going to be a real difficult time to make the

profits and the carry trade that so much of wall street which means a fundamental change that's still ongoing, fewer people, less pay. >> if you were coming out of business school do, would you still want to be in finance? >> absolutely. but i would look at maybe different areas. there are growth areas. alternative asset managers. because a lot of what was taking place on the trading desk of wall street ten years ago is now moving in to other sectors. which, by the way, gene alluded to it earlier, and that's who's going to regulate that. we do have to be concerned. it's moving into other areas. also specialty firms that are not capital intensive. the real dilemma is the capital intensity of banking has changed so. independent advisory firms have the benefit -- >> on the -- >> "new york times" on saturday. anyway the great -- >> you know, it's certainly my career and the time you've been on television has been a great bond market rally. it can only go so much farther which is to say not much

farther. when smart people like bill gross, mohamed el-erian, larry fink say it, i listen. >> gary, thank you so much for joining us today. >> you're very welcome. nice to be here. >> gary parr from lazard. we hope you come back again soon. when we come back we're going to talk about the future of facebook, the company's big announcement that's coming later this week. and then back to the detroit auto show to hear from volkswagen north america and its plans for 2013. plus the effects of the payroll tax on family dollar stores. will it help or hurt the company's business? the ceo is just ahead. stick around. >> enter the world of bentley. we go live to the detroit auto show to unveil the high end carmaker's latest creation. it's coming up, and it's only on "squawk box."

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despite the struggling growing economy, the ultimate in luxury autos the bentley delivered 22% global sales growth last year. this morning at the detroit auto show they're unveiling a new model, andrew, for the ultrahigh end auto consumer. >> thank you. >> phil lebeau joins us now with the coo of bentley moaters. phil? >> is this an indication that andrew wants to buy the new continental gt speed convertible? we're going to see it a little later on. >> who says i don't already have it in my garage? >> exactly. >> first of --

>> first of all -- >> joining us the president and -- the president and coo >> nice to meet you. >> of bentley. let's talk a little bit, we can't really show the car yet. let's talk a little bit about that demand for up extra luxury cars here in the united states. up 22% last year your sales and the u.s. replaced china. are we seeing the ultimate extra luxury buyer come back even stronger? >> yes, you have an emerging place in america in 2011 -- 22%, and last year first 23% against 2011. so, we can see an emergence of this market on the back of the crisis. it is about confidence, it's a slow pace maybe, and people -- >> there was so much talk during the fiscal cliff debate about the wealthy in the u.s. saying you know what, you're going to have to pay more in taxes and would there be as much demand

for ultraluxury cars. did that slow things down at all for you? >> of course it is always a source of worries for customers, which will affect their confidence. as you've seen, indeed has been found in some -- has been found -- and again as i said before quite enjoying -- >> christoph georges is the president and coo of bentley in the united states joining us. hey, guys, remember the u.s.ry placed china as the number one market for bentley. it's also replaced it for a number of other ultraluxury automakers. if everybody thought the ultra luxury were going to die, that's not the case. >> phil, thank you. we will see you again in just a little bit. when we come back this morning, our guest host henry blodget talks today's news about apple. plus a preview of facebook's big announcement coming later this week. good morning, henry. also a little later, will the force be with volkswagen?

this commercial was a hit during last year's super bowl. but did it help the company sell cars? we're going to head back to the detroit auto show for a special interview of the ceo of volkswagen north america to find out. stick around. more "squawk." may the force be with you.

the government taking a bigger bite out of your pay check. >> here's the money. where's the money? >> we will ask the ceo of family dollar how the decrease in take home pay will impact sales. >> facebook's big surprise. business insider ceo henry blodget on the social media giant's big announcement and this week's reports in the tech sector. >> and the detroit auto show kicks into gear. we're going to talk sales and market share with the ceo of volkswagen of america. the third hour of "squawk box" starts right now. welcome back to "squawk box" here on cnbc. first in business worldwide. good morning again, everybody. i'm becky quick along with joe kernen and andrew ross sorkin. we have a big lineup for you. henry blodget will be our guest host. we're going to talk to him about apple's reduced component order,

facebook's big surprise and this week's tech earnings. jonathan browning will join us from the detroit auto show. he is the president and ceo of volkswagen of america. plus the impact of the increase in the payroll taxes. we're going to ask the ceo of family dollar stores how shrinking pay checks will impact his company's bottom line. plus ilana weinstein will join us. she's the ceo of the idw group. >> chicago fed president charles evans expecting the u.s. economy to grow by 2.5% this year and 3.5% in 2014. his comments coming today in a speech to the asian financial forum in hong kong. evans forecast 7.4% unemployment this year. easing to about 7% in 2014, and importantly evans is rotating into a voting spot on the fed policy setting panel this year. let's take a quick look at u.s. equity futures at this hour. we do have red arrows. nasdaq is off 15 points. the dow jones looks like it will

open off about 10 points. and s&p 500 would open off about 1.5 points. let's go to overseas to asia where we do have some green arrows. surprisingly, shanghai composite by the way, up 3%. so that's real. and let's also fly quickly over to europe, ftse marginally up, cac and dax up marginally, as well. u.p.s. is withdrawing its $7 billion bid for tnt express on the expectation that the european commission is going to be vetoing it. u.p.s. wanted to buy the dutch delivery firm to gain access to its network in the fast-growing asian and latin american markets but apparently regulators don't agree that's the right thing to do. >> and the plan to avoid the debt battle in congress by producing platinum coins valued at $1 trillion appear to be off the table. the treasury department says the plan won't work and it won't produce the coin. the fed reaching the same conclusion. they don't print anything in that small of a denomination. about the idea, the united states is expected to reach its

authorized debt limit of $16.4 trillion next month. cnbc's steve liesman joins us now with the latest potential solution to this debt ceiling crisis. who is out if evans is in? for voting? >> i'd have to go over that. they're going to lose, i think it was like a net gain of one dove. >> oh. >> plus one dove. >> evans was not a dove? >> i know lacquer is leaving. i'd have to go over -- i know who is joining. i know rosengren from boston and evans from chicago is joining and maybe plosser from philadelphia. or is that next year? i can't remember. guys, the nfl contest there was a fifth game over the weekend, the debt ceiling showdown in washington. both sides fighting hard. no clear winner yet. administration officials in a series of discussions i had telling me that all the cool, clever and quirky ideas are off the table. as joe said the administration rejecting the platinum coin

idea. they're rejecting another idea that was in "the new york times" over last week, the idea of the treasury issuing script, and previously they had rejected the concept of the 14th amendment so you can see the trend here, it may or may not be legal. a lot of different ideas but they're not going with the quirky ideas. there are only two options to deal with the debt limit the president's press secretary said in a statement over the weekend. congress can pay its bills or it can fail to act and put the nation into default. okay. that's the one side. at least some house republicans on the other side are seriously considering putting the nation into default. politico says this morning default is becoming more widespread and getting more serious traction among the house republicans than people realize. house republican conference chairwoman kathy mcmorris roberts saying i think it's possible that we were shut down the government to make sure president obama understands that we are serious about spending cuts. she said there is no more road to kick the can down when it comes to those spending cuts. meanwhile the federal reserve would not comment to me on what they would do if there was an

order from the treasury to make a payment if there's a bill there, but no money in the treasury's bank account. in the previous debt ceiling debates, the fed worked together to come up with a payment plan with the fed to prioritize how to use the money that the government had on hand. but i talked to several former fed officials about those prior debt ceiling showdowns. they tell me the fed internally resolved not to fund the treasury if it ran out of money. so that's another idea out the window. and guys, what's interesting here, is that even if we hit the debt ceiling, the government, as long as there's appropriations, will continue to gather up bills. and there are all kinds of legal statutes about if the government doesn't make a payment, and interest on those bills, and everything so that doesn't solve it. only when the appropriations run out and there's a second kind of debt ceiling showdown moment, which is the end of march when the continuing resolution runs out, and that's when they'll shut the government down and the government will stop incurring costs. so as long as there's

appropriations, the government will continue to spend, and only shutting down the government stops the spending, and the accruing of debts, which, by the way, carries an interest rate that is probably going to be higher than what they would pay if they were issuing debt. >> hmm. >> story just by the way, or do you think it's real? >> i think everybody's being provocative. do i think my story is provocative in the sense of the administration saying all these other ideas, they're off the table. focus on solving the debt ceiling or putting the nation into default, there just aren't these crazy ways around it. same thing with the house. they're digging in their sides right now. i don't know if i'm reporting -- doesn't have to do with the nfl games because i was on the phone with former general councils of the treasury over the weekend. i don't know if this is like a pregame show in the sense that they're talking trash to each other right now. and whether or not, where they actually feel in this debate, does the leadership of the house, or the republican leadership really want to do default unclear to me? would the administration if they were faced with a default

scenario ultimately resolve -- go on to one of these quirky ideas? unclear. right now they're taking the platinum coin off the table. one guy said to me, look, this is not the way a serious nation acts. they said these are sort of wanna republics. >> if i hear you right we've taken two banana republic options off the table. the coin and -- >> but we had another one. >> by the way, henry blodget is here. lovely to see you. >> the u.s. is talking about voluntarily defaulting and stiffing the financial public. and what are your sources at the fed off record? are they terrified? or do they think this is just they're showboating and we're going to get through it. >> i don't know, henry, how much you were aware of this. i got an education over the past several days. we've been through this a lot of time. i think this is 16 times since like 1980 that we've been through this debt ceiling stuff. been there, done that. they are not -- and one of the things they don't want to do for sure is be involved in the politics of this.

so they're as concerned about being seen as being partisan as they are about the outcomes here. and yeah, they're concerned, because, you know, bernanke's been out there for a very long time saying, if you were to resolve some of the fiscal and financial debates that are going on right now, this economy may have a chance to get some real growth going. but, he's also concerned that, look, if we ultimately default, that's going to be a huge knock on the economy, and they are quick to point out about how the economy suffered from the fiscal -- the debt ceiling debate last year. >> i missed -- i miss geithner. >> already? he's not gone yet. >> why do you miss him? >> i just do. i don't think i appreciate -- i think we're going to learn to appreciate it. >> i appreciated him. >> what about a cnbc contributor? he wants to make some money now, doesn't he? i think we need to -- cnbc contributor for starters. >> i'll make him the offer. >> because you talk to him once in awhile. >> what do i have, $300 a month?

>> for starters. it's not going to make him rich but for starters. >> just to kind of get -- >> supplement his income. because his payroll taxes went up. >> his payroll taxes went up. >> by the way, i think he makes $199,000. we fell underneath that $200,000. >> i think of a lot of people in the past that i thought at the time that they were torturing me and i look back at them now -- >> it's the delusion of nostalgia, joe. >> no, i miss geithner. >> like the '50s were great, right? >> geithner was a, i think a calming influence on some of the radical tendencies of people. >> you know, we're all going to give jack lew a shot. he's got a little -- >> giving him a shot. he can take shots at me already. you said this guy is the least independent guy they could have found on the planet. >> i was saying there was nothing independent in his background. >> now you're trying to get an interview so you're sucking up to him? don't change your story. >> i'm being very clear about what he said.

he doesn't have anything that's independent -- >> i looked up your question on the fomc. okay it looks like evans, rosengren, bullard and george are coming in. who's going out is lacker, lockhart, and yellen. so that adds up to one more. >> rosengren are probably your doves out there. >> yellen is off, though? >> no, yellen is not off. >> oh, i'm thinking the old. it's williams now. i just wrote down -- i was still thinking -- >> i still have that in my head. she's the vice chair. she gets to vote all the time. >> he'll be busy. right? anyway. let's -- thank you. >> thank you, steve. >> theme song? >> all the things that he writes. >> and star wars. >> also in our headlines this morning, apple reportedly cutting its component orders for the iphone 5 because of some weaker than expected demand. sources tell "the wall street journal" that apple's orders for screens for the first three months of the year have dropped to roughly half of what it had previously planned to order. apple is said to have notified

of the suppliers of that order cut last month. shares of apple actually dipped below $500 a share earlier this morning. you can see right now they're resting right at 502.95. that is a drop of about 3 1/3%. plus we're a day away from the mystery announcement coming out of facebook. that stock has risen over 30 for the first time since july. fortunately we have somebody who can talk about all these tech stories with us. henry blodget, the ceo and editor in chief of business insider. he's our guest co-host. thank you for being here. >> thank you for having me. >> let's jump on this stuff about apple. seems like the bad news couldn't continue. >> the hits keep coming. and this is sort of confirmation of what a lot of analysts have been saying over the last month, which is we've had these order cuts. what was interesting in the "journal" story, they said clearly it is due to lower demand than apple expected. there was speculation that maybe apple had just placed a huge order to lock up the parts. now they're actually saying it's because of lower demand. >> a big drop, a big -- >> huge.

>> huge drop below what had been expected. are people maybe buying i'm trying to look for a silver lining in this, mini ipads or something? i got one for the holidays instead of an iphone. >> i'm sure they're buying ipads minis and -- >> but they're also buying >> what's driven apple stock is the iphone. it's been an incredibly profitable product. they have owned the market, now clearly they are losing ground to competitors. the samsung phones are by many people considered equal. same with the google phone. and, iphone sales are just not going to grow the way they have before. so, from a stock perspective you have to look at the margin. apple has an unprecedented hardware company margin. it's almost certainly going to go down in the future and the stock market doesn't like that. >> you think it's down from here on out or is there a way for that stock to get back to 600, even 700? >> i think it's going to go through a long consolidation period. i think the profit margin has to come down and i think that's because it's too high. i think the company has been so focused on selling right at the top end of the market, making as

much money as it can, meanwhile, they have missed where the growth in smart phone market is now, which is in emerging markets where people cannot pay $600 for a phone. >> you think they're going to go cheap or not? there's been some big debate where there's a suggestion that they were going cheap and then there was the comment in asia, by one of the executives, maybe they really weren't. >> i think the word cheap is a word that apple will run away screaming from -- >> value conscious. >> lower-priced iphone, absolutely. and they should. because they have built a platform with the iphone. that is moving into markets again where you just can't spend $600 for a phone. so -- and they have the margin to do it. that's the thing. it's not like they're going to go bankrupt if they suddenly offer it at a lower price. >> what's the stock worth if the margins start getting cut into? >> the good news on the stock is at 500 it's trading at something like eleven times trailing earnings and then if you look at the cash and the $125 billion of cash and you factor that out, just not an expensive stock under any scenarios.

they could start buying back stock. they could raise the dividend. there are lots of different things they could do. my guess is that the company will make a smart decision, which is let's lower our profit margin, let's invest in continuing to grow the company, and as we've seen with amazon, which has done this for years, unfortunately that often means you have a lot of sideways periods in the stock. >> what do you think apple market cap will stabilize then? >> i don't know. i would think we are stabilizing. my guess is it goes up and down. i hope they would have some products that are going to get people excited this year. the tv. i think the fact that it's been delayed for a year, apple fans will say, wait, they never announced it. but, you know, everybody in the industry is trying to front run them. >> small ipads. bigger ipads. smaller iphones. pink iphones. bigger -- i mean none of that, you know, everybody who could have possibly wanted to buy apple stocks was able -- bought it. they acted on their bullish intention at 700, didn't they? >> a lot of them did. and again, this --

>> are you going to call it -- >> at eleven times earnings, no way. there's a lot that they can do. they have a huge amount of cash. they could deploy that -- >> market cap for you and you tell me for sure that this, you know, it's not a gadgetmaker anymore. that's what you're telling me, right? it's now bigger than that. almost just under a half a trillion. >> yes. >> that's a stable market? you're okay with that? >> at eleven times earnings. are you saying -- >> i don't know. i'm asking you. call facebook muppet bait. >> facebook was muppet bait. we're talking 75 times earnings for facebook. it has -- >> fortunately enhi is with us for the rest of the hour. we will talk about the facebook big surprise and other stuff to come. >> okay. up next, we're going to head back to the detroit auto show for a first on cnbc interview with jonathan browning the ceo of volkswagen of america. then at 8:30 a.m. eastern the "squawk" ceo call continues with howard levine, chairman and ceo of family dollar stores. will the company see a drop in sales as a result of payroll tax

cut expiration? we're going to talk to him about that. all that and more.

welcome back to "squawk." all morning we've been bringing you first on cnbc interviews from the detroit auto show. phil lebeau joins us now with another special guest. >> thank you, andrew. i'm joined by jonathan browning, the man who runs vw of north america. we were just talking before the break. things have changed over the last year for vw here in the u.s., haven't they? >> that's right. things have really changed. vw is now part of the conversation when people are out there looking for a car, we've seen many, many more people shopping for vws. and really appreciating what affordable german engineering has to offer. >> the consideration is really the key here. because before, you were not always in the conversation, were you? >> that's right. what we've seen, even just over the last 12 months, are consideration in the overall marketplace going from 15% up by three whole points, which is maybe not so much but in the scale of the car business is really a dramatic shift. from 15 up to 18 points. a lot of people as they're shopping some of these wonderful, affordable german engineering products. >> you concentrated on the jet

to, the passat. let's talk a little bit about suvs. because you really have been not as competitive as you'd like to be, especially on the lower end. you've got a new car that you're introducing here. we can't show it yet but this is the beginning of you saying you've got to address this market which is huge in the u.s. >> absolutely phil. we're building this business layer by layer. jet to and passat extremely strong in the marketplace. but four of the top five segments in the u.s. are midsize and compact sedan, midsize and compact suv. so we're very strong on the sedan side. now we're building that presence on the suv side. as you say, tiguan in the marketplace and we're going to be revealing a new concept vehicle. >> the cross blue. >> the cross blue that goes right into the heart of that midsize suv. i think it's a really exciting time. >> on a regular basis i get e-mails all the time from people saying when will we see more tdi, the clean diesel? can you expand much more or do

you think that that market is pretty capped? >> we see that continuing to grow. we saw the clean diesel technology, the tdi being more and more accepted in the marketplace last year. we were the first with the passat to introduce clean diesel technology into the midsize sedan segment and that's really taken off. so we expect this to continue growing. yes, you also see people preferring hybrids, some electric vehicles. really tdi is a huge growth opportunity for the market as well. >> jonathan browning. the man who runs vw north america. sales up 30% for these guys last year. they're not going to see 30% growth this year but they are on a roll in the u.s. back to you. >> all right, phil. great. say 30 again for me. >> 30! >> not a boxer day for you, is it? anyway, thank you, phil. >> i don't know did you hear how high it was? 30%. coming up the government taking a bigger bite of your pay check courtesy of the payroll tax cut

expiration. we're going to talk to the ceo of family dollar. a company that will possibly see a drop in sales as low end -- >> although i think they said they may see a pop. >> you never know. you could argue it from either side all the time. we'll speak to him next. [ male announcer ] you're not the type of person who sets goals

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welcome back, everybody. zero dark 30 topped the weekend box office with $24 million in north american ticket sales. it was the film's first weekend in wide release after earning five oscar nominations last week. also, argo scoring big at the golden globe awards last night, winning best movie drama and ben affleck winning best director for his work on that film. when we come back the ceo of a company that could be among those hardest hit by the expiration of payroll tax cuts. howard levine is the ceo of family dollar. he will join us right after this. as we head to a break, take a look at the u.s. equity futures. you'll see right now some arrows. modest declines. dow futures down 7.5. s&p off just over a point. nasdaq futures down 11.5. ♪ [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love,

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welcome back to "squawk box" this morning. take a look at some of the stocks on the move in this morning's trading. apple shares are under pressure this morning on reports that it's cutting its orders for

iphone 5 lcd screens nearly in half. at one point this morning, shares dipped below $500 in premarket trading. ubs says the report appears to be old news reported last month. apple has not finished a trading session below $500 in eleven months. check out shares of defense maker verix. separately transocean shares getting a boost this morning. carl icahn is acquiring a 1.56% stake in the operator of offshore rigs. icahn seeking regulatory approval to boost that stake to just over 5%. tax bite. >> tax bite all day on cnbc a special series that we're calling a tax bite. where did your money go? earlier this morning we talked to piper jaffray retail analyst about the impact of the higher payroll tax. >> what we get most concerned

about would be at the lower income end of the spectrum where consumers live on more of a month-to-month budget. that's just less money for a lot of retailers that would cater to that income demographic. >> you're looking at retailers -- >> that would be the dollar stores. specifically like family dollar, dollar general, or dollar tree. >> joining us now howard levine, chairman and ceo of family dollar stores. you're sensitive to this type of stuff, howard. thanks for coming on today. in past periods like this, is there a pretty clear-cut cause and effect that we will see if people, if your customers get $15 less per week, that $15 cannot make its way into family dollar's coffers, can it? >> sure, joe. and good morning, everybody. thanks for having me this morning. you know, when i think about some of the current news, i've been around our business for just about my whole life and we've been through many economic

scenarios that have been a lot more challenging than this one. you know, even going back to 2008 when gas prices were going through the roof did you know family dollar was the number one performer in the s&p 500? i think we are in the value conscious business. we are in the business to provide our customers with things that they need and use every day, and that's really our sweet spot of our business. so, while it's challenging out there, and the payroll tax is certainly not a positive for us, we think that we are doing the right things for this kind of economic scenario. >> you can almost see whether it's right or wrong on the stock chart. in the past you would say that typically that may be the reaction, but that presents an opportunity for long-term holders, is that your notion for them? >> sure, joe. you know, i don't know if most of your listeners know but over the last two years we've added 40% to our assortment in the food and health and beauty area. those have been big drivers of

our business. and although our first quarter was only up slightly on an eps basis our consumable sales were up close to 19%. what that says to us is that the consumer is still alive and well. they're looking for their basic needs in the neighborhood that they live in. they really like what we're doing and despite the challenges on the discretionary side of our business, we think that we are still very well positioned to drive our business in this kind of economic environment. >> all these guys are saying the same thing, though, howard, these analysts, that to drive traffic you're going to have to get even more promotional which could hurt margins. will that be something you need to do? >> you know, that is something that i've heard for a number of years and yes, when things do get tough things do get more promoti promotional. but that's our business, joe. in addition to that, i think what we have seen over the last few years is really a customer mix shift where that core low income customer has become a

smaller piece of our business but this tradedown customer has become a more important part of our business. the things that we're doing for example. we're going to renovate our entire chain and be done with that in the next three years. we're about halfway done right now. we really have a strong quality improvement initiative. our family gourmet name is doing outstanding. we've really upgraded the look and feel and taste of that. in fact i invite you guys to go down to your local family dollar store now and test it out. it's fantastic. we're getting a lot of positive play from some of the things going off. it's tough out there and we'd love to see -- >> howard? >> yes, ma'am. >> just to talk about that tradedown. the analyst we spoke with earlier today, we did talk to him off air and he said the trade down impact has been a big thing for your company but also suggested that the numbers for the tradedown, the number of people coming in trading down that those numbers had been dropping off at the end of the last year. can you give us any percentages to kind of tell us how that is

happening and how things are going there? >> yeah, you know, we really haven't seen those trends, becky. i'd also tell you we're changing as we're speaking. the sthings that we're doing to our business, the renovation program we're really updating our chain, our quality improvements, our shopping conditions. >> so he was just wrong the tradedown numbers have not slowed down? >> what i'm saying is we haven't seen that in our business. but most importantly we're doing things to impact that when we're renovating our chain. we're upgrading our quality, improving our shopping conditions. we're doing some things to help that and really communicating to our customers that we have upgrades and we've done a lot of positive things to position us for that tradedown customer. >> can you give us any insight as to how big of a portion of the business that is the tradedown? >> you know, we break our business down by segment so we have the 40,000 and below which is our core customer and then the tradedown customers in that 40 to 70 range. >> how much of the business is

the core customer? how much of it is the new customers coming in? >> the core customer is the majority of business. what we have seen going back for several years now, that piece has dropped off just a little bit while that tradedown has continued to increase. the core customer still extremely important to us. and we're doing everything we can to help her make it through the week. >> usually trade at a premium and you're at a discount now. will be interesting to watch, howard. seems like all these guys move at the same time. these analysts, and i just don't know. >> these analysts. >> oh, i forgot you were here. >> sorry. >> ancient history. >> is it a 12-step program? did you skip in your meetings? >> howard w appreciate it. thanks for being here today. appreciate it. good luck. >> thanks for having you. >> we are just a day away from the mystery announcement coming out of facebook. we have more from our guest host this hour.

business insider ceo henry blodget. people have been trying to figure out what this facebook announcement. what do you think it is? >> i have no idea. the leading candidates are a search engine, a phone of some sort, a communications product. a video product which would be a video ad in the news feed. ann ad network that would allow facebook to spray ads all over the internet. >> can they possibly live up to the hype at this point? >> at this point, probably not. and i think i should say the idea of a phone, an actual hardware unit is crazy. zuckerberg's already said it's crazy. maybe there's some communication or app platform or something they're talking about there. search, they have to go into that business at some point. it is a huge opportunity for them. but to call a press conference to say we're going into the search business. why would you do that? >> video? >> i think so. something like that. maybe some communications thing. >> where are you on facebook

stock right now? >> i think what's happening on the stock is the revenue's reaccelerating, getting momentum investors frothing at the mouth. there's an exiling story here. we've gotten past the lockups. people think we're going to have a couple of quarters of acceleration. my concern with the stock is facebook is a mature company. it's trading at 50 times earnings when you've got apple and google and many other good companies trading at ten times earnings and 15 times earnings and it's somewhat, that just creates risk. if they stumble a lot of downside. >> you still think it's muppet? >> i don't think so. it is a great company. it's just a question of what you pay for it. >> what's a fair price? >> well, i would say a fair price is below where we are today. ultimately because i think the stock will trade at 20 times earnings, eventually. but, momentum people don't care about valuation when companies are accelerating and that could continue for a few quarters. >> all right. we're going to have much more from henry blodget still to

come. also when we come back we will talk to wall street hiring and compensation with ilana weinstein. don't miss "squawk box" tomorrow when we'll be talking housing with warren buffett's ceo ron peltier.

all right. welcome back, everybody. you do see red arrows. the s&p futures are indicated down by about a quarter of a point. dow futures off by just about 3.5. nasdaq futures down just 10.5. >> credit suisse cutting its bonus pool. that would mark the fourth year in a row the swiss bank has slashed payouts. a newspaper in zurich says the bonus pool is seen falling another 20% in 2013. a nice segue to our next guest. for more on wall street bonuses and competition joined by ilana weinstein. founder of idw group. thank you for being here. >> thank you. >> how bad is it? we heard about morgan stanley. we heard about credit suisse. i want to get to s.a.c. capital. but they're doing maybe the opposite. they may be paying people more. give us a survey here. >> well, it's not good. it is the third year that

bonuses are going to be down. but there's going to be particularly in equities. in income there is going to be differentiation between the europeans and the american banks. the big balance sheet american banks that have lending capability and the ability to meet the capital requirements with the oncoming regulation are going to pay up to 30% in fixed income, whereas the europeans like credit swiss are going to be down. >> i'm a banker, an m.d. at a big major name bank in fixed income and i've been doing it for ten years. how much money should i make? >> depends where you sit. >> give us a range. >> i mean you know, it really depends. it's impossible to answer that question. what i can tell you is many firms will cap bonuses again this year. which is very material. >> what's the most anybody's making anymore? >> i mean, there are people making seven figures of compensation. but the issue is -- >> but they're not making eight?

are they making eight anymore? is eight over? >> eight is kind of over. >> okay. >> and even if -- but even if you were so lucky, right, the reality is, if your bonus is getting capped at just over $100,000 and you're making home $60,000 after taxes that's a huge liquidity crunch compared to the way. now if you're lucky enough to be earning eight figures you hopefully aren't in a liquidity crunch. >> if i graduated from business school and i'm in -- i'm two years in, how much money am i making? >> i mean, if you graduated from business school two years in, you're a couple hundred thousand. but, it's more about what the forward looks like. the street used to be seen by people graduating from business school and undergrad as a gateway to prosperity and given that the levers that made the street so successful are going away, you can't use leverage the way you once could. you can't take risk the way you once could. all of these high margin, highly complex products, there isn't

much -- they're muted out at best. it's what the forward looks like. >> is it harder to recruit as a result? >> there's not a lot of recruiting going on in investment banks. the real bid in the market is more on the bye side and there aren't as many seats within the hedge fund world as there is hundreds of thousands of seats on the sell side. >> where is wall street compensation now in context? is it going from staggering to just amazingly huge? or is it actually starting to come into parity with other industries? >> i think it's absolutely starting to come into parity. you know, if -- look, fixed income, as you know, has historically been 50% of bank's revenue. and that is the business. that is the division that's going to get hit hardest. with the oncoming regulations. so, the reality is, in order for a bank to generate the kind of roe it did in the past it can't

come from those high margin businesses it's going to have to come from levers like head count reduction. compensation reduction. and so that's going to mean that compensation is going to continue to come down. i don't think it's at parity yet but that's where it's idheaded. >> does mea kids coming out or people with their mbas are they changing their minds midstream? are they saying i want to do something else? >> i don't think yet because the dust hasn't quite settled. all of the regulation hasn't yet really fully been enacted yet. but we know it's coming. and i think that in the next few years, as compensation continues to recede, people coming out of school, and look it's still a great training ground. if you want to end up at a hedge fund, spending two years in goldman's investment banking program is a great place as a stepping stone to end up there. >> gary parr told us it's going to get worse before it gets better. >> absolutely. and i'm not sure it's going to get better.

>> hedge fund land just generally speaking? is there still a lot of hiring going on? what's happened to bonuses there? >> there it is truly still a pay for performance culture. so, it depends on performance. and this year, you know, like the press -- >> i assume that they used to be competing with people at the banks and they don't have to compete with people at the banks the way they did before. i would say a little bit less. >> they're competing but they're not really competing with people at the banks because the reality is the banks have been so picked over. when we recruit, we do most of the recruiting to the bigger funds. at senior levels. what they're looking for is not an analyst or someone who's a marketmaker at an investment bank. they're looking for someone who is at a peer fund, and performing well. so, and look, money continues to pour into the alternative space as you know. most of it now is coming from stickier, higher quality institutional capital. and it's going to the bigger more institutionalized funds. yes, they're continuing to grow and they did well last year. >> one of the bigger more

institutionalized funds is s.a.c. capital. the reports have been given the entire trading investigation he's had to raise everybody's pay to keep them there. what do you know about it? >> i think that that's a smart thing to do given it's a tough place to be right now. >> is he having a hard time recruiting? if he wants new people are they saying no? i don't know if they're a client or not. >> i think that it is a it's a place that's a hard place to be right now and i also think that people are being very thoughtful about recruiting out of there, because they don't want to washington into a situation, where the person they're recruiting is going to be deposed for the next four years. >> they're not recruiting? >> not much. >> i can't imagine manhattan real estate -- >> i'm with you 100%. >> i've always thought this. i mean you -- you keep knocking ought out walls of the adjacent

departments. you knocked out ceilings and floors now. >> i took the whole thing. >> but you're going to lose. >> i mean, really, where are these people going to come from? >> well, real estate always lags the economy. i feel like i'm with you. i think it's going to happen. i just think it's maybe three, four years away. but it has to get hit. >> i'm going to swoop in. >> you going to swoop in? >> like three or four years from now, like a vulture. do i need a visa to get in there from jersey? the co-op board is going to take one look at me and there's no way i'm getting through. all right. ilana, thank you for coming in this morning. appreciate it. coming up, don't start your trading week without a healthy dose. i don't think that sounds good. get a dose of something. >> not with the flu going around. >> yeah, exactly. a healthy helping of james cramer. we're going to ask him about apple, facebook, transocean, and the other stocks to watch next. are you tired of waking up like

this? why not start your day with joe kernen, and the animal orchestra. get realtime financial market coverage and business analysis from the network that's first in business worldwide. have a great day. >> download the cnbc alarm clock from the apple app store. and wake up with your favorite "squawk" anchors. >> rise and shine! >> and the latest market headlines.

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welcome back to "squawk box." let's get down to the new york stock exchange. jim cramer joins us. we said we were going to talk to you about -- what did we say? i think some apple, some transocean, some facebook. what are you seeing today, jimbo? >> obviously there's apple in the cross fire every day. this time, is it old news or not? every time you have anything where you have to wonder whether it's old news or not, you have to presume the problem can't go away, and that everyone has to readjust. it's just a very tough own. facebook is the opposite, exactly as henry said, it's got remarkable resilience.

and it's also viewed as the hot stock. transocean, a guy takes a little bit of stake. it's a very inexpensive stock in a group that has other than energy services. and i think that it's great if carl wants to try to get something cooking. but it's a gigantic company and i doubt that you can get it taken over by anybody. >> jim, on apple, it's now trading about 11 times earnings, they have this massive cash pile. is there some point the valuation begins to protect you on the down side, where you get different shareholders who come in and say, i don't care about the iphone sales this quarter, it's trading at a roe reasonabl price. >> i have to believe there's some valuation underpinning. but we took in a lot of people who were, i regard as being retail investors, between 500 and 700, who don't really understand the concept of valuation and they have to be flushed out. they don't want to hear it, but there is a level where you can

say, you know what, i don't care. but the law of large numbers is against them. the idea that they are not as hot as they used to be against them, and this shareholder base is just terrible, henry. it's just horrible. >> yeah. hey, jim, does it seem to you that nfl, that really good teams just end up winning? have you noticed that, that the cream rises this time around? what's going to -- who's in rt super bowl and who's going to win, do you think? >> you see a lot of the hot teams go all the way. this is not the case. now it's the best teams that are going all the way. >> best teams are winning. >> right. i think the nfl product is just extraordinary. here you have something where you say, listen, the seahawks are hot. and then they just don't make it. agree bay has gotten hot. they don't make it. you're right, this is a sea change. >> yeah. and so if san francisco's playing new england, i hate to cut baltimore short and i hate to cut atlanta short, but can new england play on the same field with san francisco?

or am i just snowed by watching that game? >> no, new england is just incredible. it's just a machine. they lose gronk. it doesn't matter. maybe the ray lewis charm can continue. but new england is such a dominant team, it's just like the old days. >> but with san francisco, i can't tell. i'm an afc guy. >> pretty incredible. but i also know in the end, look, brady is -- he's just unstoppable. >> and he's just so despicable, marries the supermodel, and he looks like that, and he's got the hair and the body. >> he's a nice guy. >> and he's a nice guy. i hate everything about him. >> the ownership there is just the opposite. they're low-key, they're terrific, they are not showmanship. so maybe they balance each other out. >> okay. >> thank you. >> thanks, jim. >> when we come back, our guest host this hour has been henry

blodgett. we'll give him the last word. stick around. tomorrow, on "squawk box," facebook's big announcement. we'll talk to an analyst about the next big thing from the social media giant. plus, senator rob portman on the deficit battle shaping up in congress. "squawk box" starts tomorrow at 6:00 a.m. eastern. let's go. ♪ ♪ ♪ [ male announcer ] introducing the all-new cadillac xts... another big night on the town, eh? ...and the return of life lived large. ♪ nothing. are you stealing our daughter's school supplies

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